While many have raised eyebrows over the three-year contract for new University of Colorado system President Mark Kennedy, two experts say it offers more protections to the university than it does the president.

Kennedy, who will be leaving his post as president of the University of North Dakota for CU, will receive a base of $650,000 for his first year and $850,000 for the remaining two years.

He also will receive a $200,000 bonus if he meets certain objectives, which would bring his first-year salary up to $850,000, according to his contract.

Some have criticized the various perks included in the contract, especially given Kennedy’s fraught introduction to the CU community.

“As someone who grew up in Colorado and was faced with really pricey schools, I just think that the extra perks that he is getting are out of line with students’ experiences,” said Colorado Secretary of State Jena Griswold, who took to Twitter shortly after Kennedy was named president to express her “sticker shock” at his contract.

The Board of Regents announced Kennedy as the sole finalist in its presidential search on April 10, sparking protests, open letters, petitions and resolutions calling for regents to reconsider their choice and publicize more candidates. Despite the outcry, the regents on May 2 voted 5-4, along party lines, to appoint Kennedy as president.

Kennedy might be receiving several perks, but experts who study university presidential contracts said he has fewer protections than the university. One unique feature is a penalty built in for early resignation.

The upside

Judith Wilde and James Finkelstein, both professors at the Schar School of Policy and Government at George Mason University, have studied presidential searches and contracts for a decade. Finkelstein teaches public policy and Wilde also is the chief operating officer at the school.

Over the years, the pair have compiled nearly 300 presidential contracts in a database, possibly the largest collection in the country. Lawyers who are negotiating contracts call them to hear what they’ve seen, and they’ve written several stories for Inside Higher Ed.

Wilde and Finkelstein generally classify contracts based on their level of sophistication. They said Kennedy’s contract is “moderately sophisticated.”

While it is highly sophisticated in some areas, it is lacking some key features they’ve seen in other contracts. Overall, though, Finkelstein said it’s a “very good contract in terms of the protections that it offers the university.”

Positive features of the contract include the list of 18 responsibilities and duties, which is “by far the most detailed and comprehensive set of duties that we’ve seen in any contract,” Finkelstein said.

It’s a good thing the contract gets specific about these, he said, although some of the language is not typical. For example, item 3J says the president must promote diversity, protect freedom of expression and academic freedom, create financial accountability, and ensure access and equality.

Finkelstein said this seems to address specific issues the community raised in the two weeks following the regents’ vote to move Kennedy forward. However, university counsel Patrick O’Rourke said that was language he included in his initial draft and it matches the charge given to the search committee.

The section on suspension or termination also is one of the most detailed Finkelstein said he has seen. Finkelstein and Wilde also said the section on resignation for good reason, which mainly protects the president, is something they’ve never seen and will now recommend be included in contracts as best practice.

The section dealing with termination without cause also has some of the best language they’ve seen on mitigation and limits CU’s liability, they said.

What happens if Kennedy leaves also is unusual, though it protects the university. The resignation section says Kennedy must provide advance notice before he leaves, and the university he goes to will have to pay CU a recruitment fee.

While this provision is typical in multimillion dollar coaching contracts, it’s “highly unusual in presidential contracts,” according to Raymond Cotton, a school and college attorney in Washington, D.C., who has provided counsel on presidential contracts in the past.

“If somebody’s going to take a risk, in my opinion, it’s not fair to make it on the individual,” Cotton said. “… I don’t understand the rationale.”

Cotton said that, if the Board of Regents did its due diligence in evaluating Kennedy, it should be satisfied he is the right person.

“But to bring him on and say, ‘Gee, you know, we’re afraid you’re going to go hop, skipping and jumping’ … that flies right in the face of something called academic freedom,” he said.

Cotton said he would have advised Kennedy to “turn around and run 100 miles away” because of the clause.

“It sends a message to the world we don’t trust this guy,” Cotton added. “If we trusted him, then we would rely on his signature on the document, on his word.”

O’Rourke rejected that idea, saying the university is making a significant investment, and it wants to be able to recover that investment should Kennedy be recruited away.

Kennedy’s track record at the University of North Dakota — where he applied to be president of the University of Central Florida less than two years after starting — was not a factor in the inclusion of the clause, O’Rourke said.

“I think we have to approach it first from the standpoint that the board has never had a multiyear contract with a president before, so this is something that they’re doing for the first time. They will need to, over time, evaluate how the contract is,” he said. “More than reflecting a lack of faith in Kennedy, it’s recognizing that we’ve never done this before.”

Board of Regents Chair Sue Sharkey declined to comment on why the board included this section, but said that the board does trust Kennedy.

“We would not have hired him if we did not trust him,” she said.

Potential downsides

Many have criticized Kennedy’s high rate of pay along with the salary incentives he could receive.

The average salary for the president of a university system is about $437,000, according to the 2017-18 Administrators in Higher Education Survey conducted by The College and University Professional Association for Human Resources. The average salary for presidents of a research university system is about $625,000.

If Kennedy meets the required benchmarks outlined in his contract, he could make $850,000 in his first year.

While Finkelstein said Kennedy will be “on the high end” for public universities, O’Rourke and Sharkey both said the salary falls in the middle compared to other Pac-12 institutions. On the high end, the University of Southern California president makes $1.7 million. On the low end, the president of Oregon State University makes $550,000.

However, Kennedy’s pay looks much higher when compared to systems such as the State University of New York, which includes 64 campuses and 424,000 students, and the University of California system, which includes 10 campuses and 250,000 students. SUNY’s chancellor made $560,100 in total compensation in the 2016-17 year, and UC’s president made $570,000.

“I think the salary that Mark is going to be paid is competitive based among those schools we are in the same realm with,” O’Rourke said.

Sharkey also said CU can’t be compared with other systems, as campus chancellors play a larger role in some systems.

Kennedy will receive the $200,000 bonus for completing four tasks: submitting a framework for a strategic planning process, visiting at least four rural communities, submitting an outreach plan for governmental leaders and donors, and submitting a proposal for a diversity and inclusion campaign.

“If you’re going to give a bonus, there should be a real reason for that bonus,” Wilde said. “… Essentially, they’re giving him an extra $200,000 for doing his job.”

These bonuses are added into contracts, Finkelstein said, because president compensation “has become increasingly controversial,” so the base pay looks lower this way.

Sharkey said the bonuses are the regents stating their priorities.

But Griswold, the secretary of state, was hit with sticker shock when she first saw the news about the bonuses.

“No one should have to be paid $50,000 to visit four towns in the most beautiful state in the nation,” she said, adding this is “not a good deal for Colorado.”

Kennedy also will get other perks, including $80,000 for moving expenses and temporary housing. The average amount given for moving expenses in Wilde’s database is $23,000, but O’Rourke said this was intended as a one-time payment to help Kennedy get established in Colorado, as CU does not offer a presidential residence and his contract doesn’t include a living allowance.

Finkelstein said the language under the section for annual evaluations could be “potentially worrisome” for Colorado, as there are no clear limits on the incentives Kennedy could earn. Sharkey said regents have not yet established that.

The language also suggests Kennedy will establish his goals with the board, but O’Rourke said the board will define the goals and Kennedy will negotiate the financial terms. However, Sharkey said the board will work with the president to establish goals, as they always have.

Another potential problem is the reporting of outside benefits clause, which says Kennedy need only get permission from the board’s chair to do compensated service on non-university boards of directors, at professional speaking engagements or in publications, among other things.

“When you only have one person who has to approve things, then it’s very easy for things to get out of control and become quite large,” Wilde said.

Some also have criticized other perks, like the club initiation fee for an area social or country club, but Finkelstein said that is not unusual, and universities often even pay for all ongoing costs.

Sharkey said she is hoping to move forward now that Kennedy has been hired.

“We’re looking forward to having Mark Kennedy as our next president, and we’re ready to move on and move forward now,” she said.

Madeline St. Amour covers the University of Colorado at the Boulder Daily Camera. She previously has covered local crime and breaking news at the Times-Call; and has covered six municipalities in Maine, the New York State Legislature and breaking news in the capital of New York.